5 Best Undervalued Stocks to Buy Now

2. Aaron’s Co, Inc (NYSE:AAN)

No of HFs: 39

Total Value of HF Holdings: $387 Million

AAN specializes in retail and leases consumer products such as furniture, electronics, appliances, and computers. During the third quarter of 2020, the company reported a 9.2% increase over the same period a year ago to $1.052 billion in revenue.

The top hedge fund holder of this stock is Parag Vora’s HG Vora Capital Management, which had $62 million invested in the stock at the end of September. An insider recently purchased 2,000 shares at around $63. The stock is down more than 66% since then.

In an article, Diamond Hill Capital mentioned that the COVID-19 crises may impact the stock but it should be in position to gain additional market share when market conditions stabilize.

“We added shares of rental and leasing services company Aaron’s, Inc. after selling the previous Aaron position in late summer 2019, when the stock price reached our estimate of intrinsic value. Weak revenue trends in Aaron’s brick and mortar stores during the fourth quarter of 2019 drove the stock price down sharply. However, its Progressive business, which processes lease-to-own transactions for third-party retail customers, is still growing revenue around a 20% rate, and it recently signed large retail customers Best Buy and Home Depot. Although Aaron’s will be negatively impacted by the COVID-19 crisis, it should be in a position to gain additional market share when market conditions stabilize.”

Pixabay/Public Domain